The dominant form of economic organisation since the C18th. An economic system in which people are driven to produce goods & services for profit. Tends to lead to the concentration of land & capital in the hands of an economic elite.

Capital

Goods & resources produced under capitalism that have market value i.e. can be bought or sold for profit.

Private ownership

Goods & resources concentrated in the hands of private companies rather than publicly (government) owned e.g. BUPA as opposed to the NHS or Virgin Trains as opposed to British Rail.

Supply and demand

The 'laws' governing trade in the free market. Providers compete to meet the needs of consumers in theoretically open competition for a market share. This competition supposedly provides the incentive that drives companies to provide the best quality at the lowest price.

Labour

This is offered in exchange for wages by workers in the capitalist system. The skills a worker possesses theoretically allows them to charge more for their services.

Wages

The payment a worker receives in return for his labour.

Consumer

The people who buy/consume the the goods & services resulting from the capitalist system of production. Tend to be the same people who labour in the capitalist system for wages which they then spend on products.

Laissez faire

Literally means "leave alone" & refers to the liberal idea that the state should regulate the capitalist free market as little as possible leaving it to operate according to the laws of supply & demand.

The state

Public institutions of law & government that maintain security & order within specific national borders.

Minimum wage

The idea that the state must intervene to fix minimum income for low-paid workers on the basis that the free market allows too much unfair exploitation of the least well off.

Protectionism

A practice in trade whereby the measures limiting free trade are introduced in order to protect local industry from foreign competition. Sometimes deemed particularly necessary in order to protect developing economies from exploitation by multi-national companies.

Public sector

State-owned industries & services that, rather than operating for profit on the open market, are non-profit making & are funded by the taxpayer on behalf of citizens e.g. the NHS, local government (councils), the civil service, etc.

Mixed economy

An economy composed of a mixture of private enterprise & publicly-funded institutions. Favoured by those who support what is known as a social market position.

Nationalised industry

Denotes companies run by the state using public funds rather than for private profit. Until the privatisation programme of the Thatcher government there were several of these e.g. British Steel, British Rail, British Coal, British Telecom, etc. The NHS, the police, the state education system, & the BBC are arguably remaining examples.

Privatisation

The process of 'selling off' public utilities, particularly associated with the Thatcher government, so that they are no longer operate as state monopolies but compete on the open market.

Democracy

The liberal ideal of representative government wherein citizens vote in free elections for political parties that compete for these votes. The winning party is said to have won a mandate to govern by popular consent.

Pluralism

A system, favoured by liberals, in which different political parties compete for power in open competition.

Naturalisation

The process by which the capitalist economic system & the free market become 'invisible' because it is taken for granted i.e. it is 'just the way things are'.

Boom & bust

The tendency of the capitalist economic system to produce periods of economic prosperity followed by huge downturns known as 'recessions' - the most extreme & sudden versions of these are called 'crashes'.